NFU set to challenge dairy tax decision

FARMERS affected by the collapse of a large dairy co-operative could be denied as much as 10m in tax relief.

HM Revenue and Customs has issued guidance on how the taxes of those who incurred losses following the collapse of Dairy Farmers of Britain should be treated and said most would not be covered.

Farmers trading as companies may still be eligible to claim tax relief on the losses they made but the vast majority of farmers, who are operating as sole traders and partnerships, will be ineligible for any rebates.

The National Farmers’ Union expressed what it called its “bitter disappointment” following the decision which farmers have been waiting on eagerly for some time.

Dairy Farmers of Britain was placed into liquidation last year causing hundreds of farmers, including nearly 80 in Yorkshire, with no buyers or homes for their milk.

NFU National Dairy Board chairman Gwyn Jones said the organisation intended to challenge the ruling.

He said: “We are bitterly disappointed that HMRC suggests that no tax relief will be available on the majority of losses suffered by DFB members.

“It seems logically inconsistent to suggest that tax relief is unavailable on the A shares issued in March 2009 because they had little or no value when issued, while at the same time stating that these shares fully satisfied the debts due to members on their member liability loans, member capital accounts and member investment accounts.

“This position must be challenged and we are already seeking further discussions with HMRC on this matter. We will also be seeking further clarification on the position for corporate members, as the current guidance only relates to individual members.”